Ford Motor Co. (F) announced that it has reduced dealerships of its Lincoln luxury lineup to 325 from about 500 in the top 130 markets, where demand for luxury products is very strong.

With the reduction in dealer count, dealers will compete less with each other and more with the same of other luxury lineups such as Toyota Motor Corp.’s (TM) Lexus, Bayerische Motoren Werke AG’s (“BMW”) BMW and Daimler AG’s (DDAIF) Mercedes-Benz.

Ford began to expand its luxury Lincoln line-up at the cost of its Mercury line-up from late 2010. The company has suspended production of its Mercury branded vehicles in the fourth quarter of 2010 and started diverting resources from the brand towards its core Ford brand besides enhancing the Lincoln brand.

At that time, Ford had announced to eliminate a third of its 1,200 Lincoln dealers in the U.S., mostly in urban areas. The company has 700 dealerships in rural areas.

The automaker has asked the Lincoln dealers to upgrade their showrooms and services in order to meet the rigorous competitive standards. Dealers have revealed that the renovations would cost about $2 million per showroom.

Lincoln is the only surviving luxury line after the sale of Jaguar, Land Rover, Aston Martin and Volvo by Ford. In 2011, the brands’ sales totaled 85,643 units.

Last year, Ford had revealed plans to invest $1 billion for developing the Lincoln brand. The automaker will roll out seven all-new or significantly upgraded new generation Lincoln models by 2015, including a small car in 2014.

Ford, a Zacks #4 Rank (Sell) stock, posted a $66 million or 3.5% fall in profits to $1.85 billion in the third quarter of the year from $1.91 billion in the year-go quarter. However, on a per share basis, earnings were 46 cents versus 48 cents a year ago, beating the Zacks Consensus Estimate of 44 cents. The decline in profits was attributable to a fall in commodity prices and anticipated reductions in Financial Services results.

Total revenues in the quarter went up $4.1 billion or 14.1% to $33.1 billion. This compared favorably with the Zacks Consensus Estimate of $29.8 billion.